Germany's government lowers 2012 GDP growth forecast to 0.7%

LONDON (ICIS)--?xml:namespace>Germany’s government on Wednesday lowered its official GDP growth forecast for 2012 to 0.7% from 1.0% as the eurozone crisis continues to weigh on the country’s economy.

In 2011, GDP growth in Europe’s largest economy was 3.0%, and in 2010 it was 3.7%.

Economics minister Philipp Rosler said after two unusually strong years, Germany’s economy remained in a “robust” position.

However, because of difficult conditions in external markets, in particular in the eurozone, the government expects a temporary slowdown in growth, he said.

“Germany’s continued economic development depends quite decisively on growth and stability among its eurozone partners,” Rosler said.

EU countries needed to take “decisive and credible steps” to overcome the eurozone crisis, he said.

A solution to the crisis meant that all eurozone countries needed to improve their competitiveness and their public finances.

“Only then will it be possible for all of Europe to return to a growth path,” Rosler said.

In related news, Mannheim-based economics research institute ZEW said this week its economic confidence indicator for Germany improved in January amid signs that the country’s economy may see only a “dent” to growth and is likely to stabilise within the next six months, instead of deteriorating further.

ZEW’s economic confidence indicator improved by 32.2 points in January, to minus 21.6 points. The indicator is based on monthly survey responses from some 300 financial market analysts.

In Germany’s chemical industry, producers trade group the Verband der Chemischen Industrie (VCI) expects 1.0% year-on-year growth in chemical production this year. This compares with production growth of 4.0% in 2011.